stat tracker for tumblr
"The words of my book nothing, the drift of it everything."
Walt Whitman

The Federal Trade Commission (FTC) has been watching social media influencer marketing campaigns particularly carefully. In the modern world of social media marketing, the line between acceptable business practices and illegal deceptive speech can be blurry. The government agency wants to ensure that consumers are not manipulated with endorsements and testimonials that brands have “bought.” In the first quarter of 2017, the FTC went on the prowl on Instagram to find influencers and brands whose posts may be violating the law. In April, the FTC sent over ninety letters to companies and some celebrity and other social media users, reminding them of the legal requirements for clarity in their influencer marketing.

The FTC has been regularly enforcing its Guidelines for Endorsements & Testimonials and DotCom Disclosure Guides for years. In fact, as recently as 2016, New York settled with Machinima and three other companies for their deceptive endorsements, with penalties of $20,000-$50,000 for each company. The FTC also settled with Machinima over similar charges later in the year. Right on the heels of that case, the FTC announced a consent order with Lord & Taylor. Nonetheless, ambiguity and deception, according to regulators, seem pervasive in social media marketing, particularly when it comes to influencer endorsements.

In August, 2016, the watchdog group Truth in Advertising (TINA) complained to the FTC that the Kardashian family and various brands were engaging in deceptive influencer marketing.  had over 100 posts online endorsing products without proper disclosures. In fact, these family members could be paid up to $300,000 for a single endorsement. TINA’s complaint alleged that the companies sponsoring the Kardashian posts and perhaps the family members themselves were duping consumers by not disclosing the material connection between the brands and the Kardashian clan.

It is possible that the FTC’s latest series of warning letters were in response to TINA and other consumer groups who have asked the FTC to investigate influencer activity on Instagram. The FTC has stated repeatedly over the last several years that social media posts should be crystal clear whether an influencer has been paid, received free products, or any other material inducement for his post. The agency’s April letters dig into Instagram, as a representative example of space-constrained advertising. The agency offers specific recommendations about how to make disclosures on Instagram that will ensure consumers understand when they are seeing paid endorsements.

The mere presence of a disclosure may not be enough to satisfy the FTC. Keeping with well-established principles enumerated in previous guidelines and case law, the FTC offers three suggestions for clear disclosures, using Instagram as a case study:

  • Instagram posts are typically up to three lines long followed by the clickable link “more”. Any disclosure should be placed before the “more” button since many consumers will not click through.
  • If the post contains multiple hashtags, links, or tags, marketers should be certain to separate the legal disclosures to make sure they are clear and conspicuous.
  • If an influencer includes “Thanks [Brand]” or #sp or #partner, these notations may not clearly indicate to the consumer that the post is sponsored. While the FTC is clear to note that there are many acceptable ways to make disclosures, it explains that any term that has many interpretations will provide the appropriate clarity.

The FTC’s letters indicate its continued vigilance regarding influencer marketing. Typically, the FTC moves on, after a period of time, from education to enforcement. State AG’s also have been active in this area, and consumer watchdog groups are clearly stirring the pot.

ACTION STEPS TO TAKE:

Now is the time to review your brand’s

  • influencer marketing strategies
  • social media campaigns on Instagram and other platforms
  • advertising disclosure mandates
  • influencer training programs
  • agency contracts and responsibilities
  • influencer contracts
  • internal procedures and stakeholders for social media posting

 

Leave a comment

The “sharing economy” seeks to empower consumers by freeing them from the burdens of ownership. The savvy CEO may wonder: How can the collaborative crowd distinguish counterfeit product from my trusted trademarked or copyrighted products? How can my company remain profitable when consumers eschew new branded goods and services? In fact, the CEO should take comfort in knowing that the brand’s intellectual property remains relevant and valuable in the sharing economy.

Companies like Lyft, Uber, and AirBnB and hundreds of startup businesses have taken advantage of social media technology to meet consumers’ demand for sharing. At the same time, major brands, like Patagonia, BMW, and Marriott, have entered this space, launching innovative branding platforms to remain relevant. Ironically, the sharing economy offers unique opportunities for traditional companies who have well-known, high quality products or services.

Defining Characteristics of the Sharing Economy

Indeed, the sharing economy thrives only in an atmosphere of trust. In fact, the Federal Trade Commission’s November 2016 report on the sharing economy focuses on trust mechanisms that facilitate seller and buyer satisfaction. The crowd’s testimonials and peer confirmation fuel the sharing economy as much as, if not more than, brands’ own marketing efforts. Reputation rating systems and related technologies feed day-to-day consumption, rather than traditional advertising models. Inevitably, brands relinquish some control over the channels of distribution in the sharing economy.

The collaborative nature of the sharing economy, thus, seems to clash with intellectual property’s monopoly concepts. At the same time, however, a recognizable trademark still assures consumers that a product or service can be trusted to deliver a predictable, reliable level of durability and performance.

The sharing economy suggests changes to the way companies do business, the way consumers interact with brands, and the expectations consumers have for their lives. Companies need to adapt if they are to thrive in this new world, sharing their proprietary rights while standing guard against interlopers. By proactively joining the sharing economy and leveraging their trusted intellectual property, traditional brands may increase sales and further develop their intellectual properties’ good will and value. Concurrently, they should seize the opportunity to shape the legal landscape, the marketplace, and the peer-to-peer mindset.

Guidance for CEO and other C-Suite Executives

As brands transition into the sharing economy, they should not disguise themselves as just “one of the crowd.” Instead, they should utilize both traditional and new technologies to disseminate a message that they are, indeed, still relevant.

To maintain the value and strength of their intellectual property, the following principles should guide the CEO and other c-suite executives:

  • Be vigilant to ensure proper usage of trademarks.
  • Enforce existing intellectual property licenses.
  • Develop creative licensing strategies for businesses marketing your goods and services. Make sure those license agreements have robust quality control measures to protect reputation and prevent abandonment of intellectual property.
  • Police the marketplace for false impressions of affiliation.
  • Partner with sharing providers to offer certification programs that provide assurances to the consuming crowd.
  • Consider launching new divisions or purchasing companies, allowing them to operate under the umbrella of your trusted brand, so as to better control distribution channels.
  • Stay ahead of the curve by utilizing cutting edge techniques, such as native advertising, experiential marketing, gamified content, virtual reality, and co-branded relationships.
  • Recognize that regulators are watching to ensure that consumers are not deceived. All advertising and marketing campaigns, no matter how innovative, remain subject to existing regulations for commercial speech.
  • Work with other industry members to establish ethical marketing practices that foster consumer confidence and discourage regulators from taking action specific to this marketplace.
  • Think strategically before approaching intellectual property infringers. Look for ways to avoid social media backlash by collaborating with those seeking to leverage your brand’s equity.

For a more in-depth look at the issues presented in this article, please see COLLEN’s white paper on the subject.

 

 

Leave a comment

Consumer Protection: Preparing for Evolution under President Trump

January 23, 2017

With the inauguration of President Trump, I have four broad predictions about consumer protection under the new administration. 1. Federal agencies will narrow their scrutiny of businesses. Chairwoman Edith Ramirez resigned from the Federal Trade Commission (FTC), effective February 10, 2017. Ramirez was an Obama appointee, and under her leadership, the FTC stepped up its […]

Read the full article →

DMCA Update: Act Now to Maintain Legal Safe Harbor

December 1, 2016

The US Copyright Office’s new regulations on the Digital Millennium Copyright Act (DMCA) go into effect today December 1, 2016. In order to maintain a website’s valuable DMCA safe harbor protections, service providers must conform to the new requirements. Background The DMCA amended the Copyright Act to address, among other things, situations in which Internet users […]

Read the full article →

Legal Reasons to Make Sure Consumers Understand Your Advertising Disclosures

October 5, 2016

We’ve all seen the fine print in advertising, but do we, as consumers, read or understand what these disclosures say? This inquiry was the focus of the FTC’s recent workshop “Putting Disclosures to the Test.” The consensus was that consumers neither read nor understand many disclosures. At the same time, the workshop suggested some best […]

Read the full article →

Hot Legal Issues for Marketers Summer 2016

August 5, 2016

It’s August, and brands are heating up their summer campaigns and preparing for fall, Marketers tend to jump on prominent news stories and seek relevance by reacting to them. In so doing, they may run afoul of trademark laws or regulatory compliance issues. The season also brings retail challenges, as bricks and mortar stores try […]

Read the full article →

Native Advertising Legal Analysis and Practice Tips

July 21, 2016

Advertising that feels and looks like editorial platform content has existed for decades. In the age of social media, however, “native advertising,” as it is now often called, has become more confusing. Brands have become more sophisticated at disguising their advertising messages within the editorial content, making it more difficult to differentiate commercial speech. The […]

Read the full article →

Food Law: Advertising & Marketing Concerns for Food Entrepreneurs

April 26, 2016

From food subscription services to mobile food trucks, food is on the go, liberated from traditional kitchens. Food law has grown with this thriving industry. For food entrepreneurs launching or growing their businesses, here are ten advertising and marketing law issues to consider. Trademark. Your food is your product, but your brand name is your […]

Read the full article →

SURTEX Attendees: Legal Tips for Art Licensing Deals

April 21, 2016

If it’s May in New York, it’s time for SURTEX. If you are an artist who licenses your art, you should be planning a trip to New York for the self-proclaimed “marketplace for original art and design.” The SURTEX show can be daunting for newcomers due to its size and scope. While your focus now may be […]

Read the full article →

Legal Problems for Franchisors in Social Media

April 4, 2016

Social media content moves swiftly and sometimes even the best marketing teams make mistakes. Those mistakes can come back to bite a franchisor, hurting its reputation and even causing legal issues. Examples of Social Media Crises: In October 2016, KitchenAid USA’s tweet feed included a tweet responding to one of the US Presidential debates. The […]

Read the full article →